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TRANSITION, CONSULTING, NONCOMPETITION AND RETIREMENT AGREEMENT

NonCompetition Agreement

TRANSITION, CONSULTING, NONCOMPETITION AND RETIREMENT AGREEMENT | Document Parties: FIRST KEYSTONE FINANCIAL | Donald S. Guthrie  | First Keystone Bank You are currently viewing:
This NonCompetition Agreement involves

FIRST KEYSTONE FINANCIAL | Donald S. Guthrie | First Keystone Bank

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Title: TRANSITION, CONSULTING, NONCOMPETITION AND RETIREMENT AGREEMENT
Governing Law: Pennsylvania     Date: 3/29/2005
Industry: SandLs/Savings Banks     Sector: Financial

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Exhibit 10.21

TRANSITION, CONSULTING, NONCOMPETITION AND RETIREMENT AGREEMENT

     This Transition, Consulting, Noncompetition and Retirement Agreement (the “Agreement”) is entered into as of March 23, 2005, by and between First Keystone Financial, Inc. (the “Company”), First Keystone Bank (the “Bank”) and Donald S. Guthrie (the “Consultant”).

WITNESSETH:

     WHEREAS, the Consultant currently serves as Chairman of the Board and Chief Executive Officer of the Company and as President and Chief Executive Officer of the Bank;

     WHEREAS, the Company and the Consultant entered into an employment agreement as of December 1, 2004 (the “Company Employment Agreement”);

     WHEREAS, the Bank and the Consultant entered into an employment agreement as of December 1, 2004 (the “Bank Employment Agreement”);

     WHEREAS, the Consultant is a participant in the Supplemental Executive Retirement Plan adopted by the Bank effective March 31, 2004 (the “SERP”);

     WHEREAS, the Consultant desires to retire and to provide services to the Company and the Bank on a part-time basis;

     WHEREAS, the Company desires to have the Consultant undertake, and the Consultant is willing to undertake, certain consulting and noncompetition obligations on the terms and conditions set forth herein; and

     WHEREAS, the Consultant is willing to relinquish his rights under the Company Employment Agreement, the Bank Employment Agreement and the SERP;

     NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the parties hereto agree as follows:

     1.  Effective Date . The “Effective Date” shall mean May 1, 2005.

     2.  Consulting Period . The Company and the Bank hereby agree to engage the Consultant, and the Consultant hereby agrees to provide services to the Company and the Bank, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on April 30, 2010 (the “Consulting Period”).

     3.  Consulting Services .

     (a)  Duties . During the Consulting Period, the Consultant shall report to the President of the Company and the Bank, and shall provide his personal advice and counsel to the Company and the Bank regarding their operations, customer relationships, growth and expansion

 


 

opportunities and other business matters that may arise in connection with the business and operations of the Company and its subsidiaries in the Commonwealth of Pennsylvania and as may be reasonably requested by the President of the Company and the Bank or his designee from time to time (collectively, the “Consulting Services”). It is contemplated that the Consulting Services will include, without limitation, monthly meetings or teleconferences between the Consultant and the President of the Company and the Bank; efforts by the Consultant to enhance the business activities of the Company and its subsidiaries in the Commonwealth of Pennsylvania, including without limitation meeting with existing and potential customers of the Company and its subsidiaries located in such state; attendance at certain public functions in the Commonwealth of Pennsylvania on behalf of the Company and its subsidiaries; attendance at meetings of the Board of Directors of the Company and the Bank to report on the business activities of the Company and its subsidiaries in the Commonwealth of Pennsylvania and attendance at certain functions of the Company and its subsidiaries. Consulting Services may be provided in person, telephonically, electronically or by correspondence to the extent appropriate under the circumstances.

     (b)  Geographic Location . The Consultant shall provide the Consulting Services in the Commonwealth of Pennsylvania, including without limitation the market areas of the Company and the Bank.

     (c)  Time Limitation . In no event shall the Consultant be required to provide Consulting Services hereunder for more than 25 hours per week or 100 hours in any calendar month during the Consulting Period, with the maximum monthly hours being pro-rated for the first and last month of the Consulting Period.

     (d)  Directorship . The Consultant shall be appointed as Chairman of the Board of Directors of the Bank as of the Effective Date. The Consultant shall continue to serve as Chairman of the Board of Directors of the Company and of the Bank throughout the Consulting Period, provided that the Consultant continues to be a director in good standing during such period. Subject to compliance with its fiduciary duties, the Board of Directors of the Company agrees to nominate the Consultant for an additional four-year term of office as a director of the Company when his current term expires in 2007 and to elect him as a director of the Bank during the Consulting Period. In addition to the compensation set forth in Section 4 hereof and any fees paid to directors of the Company and the Bank for attendance at meetings, the Consultant shall receive an annual fee of $15,000.00 for serving as Chairman of the Board of the Company and the Bank during the Consulting Period.

     4.  Compensation .

     (a)  Monthly Payments . In consideration of the obligations and commitments of the Consultant under this Agreement, including but not limited to Sections 3 and 8 hereof, the Company and/or the Bank agrees to pay to the Consultant an amount equal to $12,500.00 per month on the first business day of each month during the Consulting Period, commencing May 1, 2005 through and including April 1, 2010 (the “Monthly Fee”). During the Consulting Period,

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the Consultant shall be treated as an independent contractor and shall not be deemed to be an employee of the Company or any affiliate or subsidiary of the Company.

     (b)  Medical and Other Benefits . The Company and the Bank shall provide medical insurance for the benefit of the Consultant and his spouse during the Consulting Period, at no cost to the Consultant and his spouse, with the terms of such coverage being similar to the coverage provided by the Company and the Bank to their employees. In addition, the Company and the Bank shall provide dental and long-term care insurance coverage for the benefit of the Consultant and his spouse during the Consulting Period, at no cost to the Consultant and his spouse, with the terms of such coverage being similar to the coverage provided by the Company and the Bank as of the date of this Agreement.

     (c)  Existing Stock Options . The existing 9,750 vested stock options currently held by the Consultant to purchase shares of common stock of the Company shall remain outstanding and exercisable in accordance with their terms, with the Consultant having three months following the Effective Date to exercise his incentive stock options.

     (d)  Employee Benefit Plans . The Consultant shall be entitled to receive his vested benefits under the Company = s Employee Stock Ownership Plan and the Bank = s 401(k) Profit Sharing Plan in accordance with the terms of such plans. As of the Effective Date, the Consultant shall no longer be entitled to participate in any of the employee benefit plans or programs offered by the Company, the Bank or any of their subsidiaries, and no additional benefits shall accrue or vest on behalf of the Participant under such employee benefit plans or programs after the Effective Date, except as set forth in Sections 4(b) and 4(c) hereof.

     (e)  Lump Sum Payment . In recognition of the years of service that the Consultant has provided to the Company and the Bank and in satisfaction of the Consultant’s accrued and/or carried over but unused vacation leave, the Consultant acknowledges the receipt from the Company and/or the Bank prior to the Effective Date of a lump sum cash payment equal to $165,519.27.

     (f)  Use of an Automobile . During the Consulting Period, the Company and/or the Bank shall provide the Consultant with the continued use of the automobile that was provided for the Consultant’s use immediately prior to the Effective Date. At the end of the Consulting Period, the Company and/or the Bank shall transfer title to the automobile to the Consultant.

     (g)  Expenses . The Company and/or the Bank shall reimburse the Consultant or otherwise provide for or pay for all reasonable expenses incurred by the Consultant at the request of the Company and/or the Bank, including, but not by way of limitation, the costs of insurance, repair, maintenance and licensing of the automobile provided by Section 4(f) hereof, subject to such reasonable documentation as may be requested by the Company and/or the Bank. If such expenses are paid in the first instance by the Consultant, the Company and/or the Bank shall reimburse the Consultant therefor upon receipt of such reasonable documentation as may be requested by the Company.

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     (h)  Proration . The Consultant’s compensation, benefits and expenses shall be paid by the Company and the Bank in the same proportion as the time and services actually expended by the Consultant on behalf of the Company and the Bank.

     5.  Termination of Consulting Services .

     (a)  Death or Disability . The Consultant’s services shall terminate automatically upon the Consultant’s death during the Consulting Period. If the Company and/or the Bank determines in good faith that the Disability of the Consultant has occurred during the Consulting Period (pursuant to the definition of Disability set forth below), it may give to the Consultant written notice in accordance with Section 15 of this Agreement of its intention to terminate the Consultant’s services. In such event, the Consultant’s services with the Company and the Bank shall terminate effective on the 60th day after receipt of such notice by the Consultant (the “Disability Effective Date”), provided that, within the 60 days after such receipt, the Consultant shall not have returned to performance of the Consultant’s duties. For purposes of this Agreement, “Disability” shall mean the Consultant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as determined by a physician selected by the Company or its insurers and reasonably acceptable to the Consultant or the Consultant’s legal representative.

     (b)  Cause . The Company and the Bank may terminate the Consultant’s services during the Consulting Period for Cause. For purposes of this Agreement, “Cause” shall mean:

     (i) the continued failure of the Consultant to perform substantially the Consultant’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Consultant by the Board of Directors of the Company or the Bank which specifically identifies the manner in which the Board of Directors believes that the Consultant has not substantially performed the Consultant’s duties and after the Consultant has been given a 15 day period to cure such failure; or

     (ii) the willful engaging by the Consultant in illegal conduct or gross misconduct which violates any code of conduct of the Company and/or the Bank or which is otherwise materially and demonstrably injurious to the Company or the Bank; or

     (iii) conviction of a felony or a guilty or nolo contendere plea by the Consultant with respect thereto.

For purposes of this provision, no act or failure to act, on the part of the Consultant, shall be considered “willful” unless it is done, or omitted to be done, by the Consultant in bad faith or without reasonable belief that the Consultant’s action or omission was in the best interests of the Company and/or the Bank. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors or upon the instructions of the President or a senior officer of the Company and/or the Bank or based upon the advice of counsel for the

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Company and/or the Bank shall be conclusively presumed to be done, or omitted to be done, by the Consultant in good faith and in the best interests of the Company and the Bank. The cessation of the services of the Consultant for conduct described in subparagraph (i) or (ii) above shall not be deemed to be for Cause unless and until there shall have been delivered to the Consultant a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors of the Company or the Bank at a meeting of the Board of Directors called and held for such purpose (after not less than ten days’ advance notice is provided to the Consultant and the Consultant is given an opportunity, together with counsel chosen by the Consultant, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board, the Consultant is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail. The Company and/or the Bank may suspend the Consultant’s authority (with a continuation of the Monthly Fee during such period of suspension) after the provision of a notice of intention to terminate the Consultant’s services for conduct described in subparagraph (i) or (ii) above and prior to the time the Consultant is given an opportunity to meet with the Board of Directors, and any such suspension shall not constitute “Good Reason” as defined in Section 5(c) below.

     (c)  Good Reason . The Consultant’s services may be terminated by the Consultant for Good Reason. For purposes of this Agreement, “Good Reason” shall mean in the absence of a written consent of the Consultant:

     (i) any failure by the Company and/or the Bank to comply with any of the provisions of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company and/or the Bank within 25 days after receipt of written notice thereof given by the Consultant; or

     (ii) any purported termination by the Company and/or the Bank of the Consultant’s services otherwise than as expressly permitted by this Agreement.

     (d)  Notice of Termination . Any termination by the Company and/or the Bank for Cause, or by the Consultant for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 15 of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Consultant’s services under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Consultant or the Company and/or the Bank to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Consultant or the Company and/or the Bank, respectively, hereunder or preclude the Consultant or the Company and/or the Bank, respectively, from asserting such fact or circumstance in enforcing the Consultant’s or the Company’s or the Bank’s rights hereunder.

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     (e)  Date of Termination . “Date of Termination” means (i) if the Consultant’s services are terminated by the Company and/or the Bank for Cause, or by the Consultant for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, as the case may be, (ii) if the Consultant’s services are terminated by the Company and/or the Bank other than for Cause or Disability, the Date of Termination shall be the date on which the Company and/or the Bank notifies the Consultant of such termination and (iii) if the Consultant’s services are terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Consultant or the Disability Effective Date, as the case may be.

     6.  Obligations of the Company and the Bank upon Termination of Consulting Services .

     (a)  Good Reason; Other Than for Cause, Death or Disability . If, during the Consulting Period, the Company and/or the Bank shall terminate the Consultant’s services other than for Cause, Death or Disability or the Consultant shall terminate his services by the Company and the Bank for Good Reason, the Company and/or the Bank shall pay to the Consultant in a lump sum in cash within 30 days after the Date of Termination the sum of (1) any accrued but unpaid Monthly Fee of the Consultant through the Date of Termination (the “Accrued Obligations”), (2) an amount equal to the present value of the Monthly Fees that would have been paid through and including April 30, 2010 (the “Remaining Monthly Fees”), and (3) the present value of the Retirement Benefits (as defined in Section 9 hereof), with the present values calculated as set forth below. In addition, the Company and the Bank shall provide the Consultant and his spouse with the medial and other benefits set forth in Section 4(b) hereof through April 30, 2010 (the “Medical Benefits”) and shall transfer title to the automobile to the Consultant as provided in Section 4(f) hereof.

     (b)  Death . If the Consultant’s services are terminated by reason of the Consultant’s death during the Consulting Period, the Company and/or the Bank shall pay to the Consultant’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination the sum of (1) any Accrued Obligations, (2) the present value of the Remaining Monthly Fees, and (3) the present value of the Retirement Benefits (as defined in Section 9 hereof), with the present values calculated as set forth below. In addition, the Company and the Bank shall provide the Consultant and his spouse with the Medical Benefits and shall transfer title to the automobile to the Consultant as provided in Section 4(f) hereof.

     (c)  Disability . If the Consultant’s services are terminated by reason of the Consultant’s Disability during the Consulting Period, the Company and/or the Bank shall pay to the Consultant in a lump sum in cash within 30 days of the Date of Termination the sum of (1) any Accrued Obligations, and (2) the present value of the Retirement Benefits (as defined in Section 9 hereof), with the present value calculated as set forth below, provided, however, that if the Consultant’s services are terminated by reason of Disability prior to May 1, 2008, then the Retirement Benefits shall be calculated as if the annual benefit was paid for 12 years rather than 10 years. In addition, the Company and the Bank shall provide the Consultant and his spouse

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with the Medical Benefits and shall transfer title to the automobile to the Consultant as provided in Section 4(f) hereof.

     (d)  Cause; Other than for Good Reason . If the Consultant’s services shall be terminated for Cause or the Consultant terminates his services without Good Reason during the Consulting Period, this Agreement shall terminat


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